January 10, 2013

This is one of those glaring examples of the attitude of superiority leading to missing humor and subtlety. You may think you're smart, but it's not smart to assume other people aren't smart too. I recommend a working assumption that other people are smart, and when you think you're reading something ridiculously stupid, go through the exercise of reading it with the thought that the writer is wonderfully clever. This is especially important when you are reading something concise/elliptical. Look at every word. Think before you mock.

167 comments:

I have been trying to follow a rule that seems similar: just say what you're trying to say. Lincoln, they say, is said to have said something like that 'tis better to keep your trap shut and be thought stupid than to spout off and remove all doubt. He was probably more profound and more profane at the time.

If Matthew Yglesias, Andrew Sullivan, Maureen Dowd, Paul Krugman, Glenn Beck, Sean Hannity, and their kind were to just open up, though they might reveal their inner workings. Could damage their business models.

BTW-a coin made out of platinum worth 1 trillion dollars, assuming the thickness of a silver dollar, would be around 2.18 miles in diameter. The coin would probably conform to the surface of the earth over time. Neat.

Not that I expect the government to issue such a coin, but I'm just throwing out there how much 1 trillion in platinum actually is.

Right. What Yglesias doesn't get here is the assumption, "We would need this [impossibly huge] amount of platinum if we were to avoid devaluing the dollar catastrophically."

I've read some arguments, by people who know a lot more about economics than I do, as to why inflation won't result, if we play our cards right. To me it feels like seeing a presentation on a perpetual motion machine, created by someone who knows better, but has a sound grasp of physics.

If they present it cleverly enough, I may not be able to identify the catch - but I know there is one.

The Secretary may mint and issue platinum bullion coins and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary's discretion, may prescribe from time to time. [Emphasis added]

From the US Mint:

A bullion coin is a coin that is valued by its weight in a specific precious metal.

Matthew Yglesias is an idiot. I can see where garage got that idiotic idea about the amount of cotton in a $100 bill. A $100 bill is worth only what it can buy. What it could buy last year has no bearing on what it can buy this year. All metals have a value based on their weight.

The Secretary cannot mint a five ounce gold coin and have it stamped as worth one million dollars.

It's not a devaluation, per se, that happens instantaneously, but it's an immediate increase in the money supply. With more money chasing the same goods, a rise in prices (inflation) based on US dollars is likely while prices based on other currencies may not change. The net effect is a devaluation.

However, it's effectively the same thing as the Fed's Quantitative Easing program, where instead of the government selling Treasury Notes/Bills/Bonds on the open market, the Fed is buying them directly and holding them.

As we are running large deficits AND the Fed is using QE to finance those debts, using the magic platinum coin approach is a little more honest about the reality that we're incurring debt we're never going to pay-off with taxes collected from the people.

Interestingly, the people WILL pay for it as their money is devalued, but as every dollar is devalued by the same amount, this is effectively a FLAT TAX (percentage) on everyone so it is fair and more economically efficient.

Interestingly, the people WILL pay for it as their money is devalued, but as every dollar is devalued by the same amount, this is effectively a FLAT TAX (percentage) on everyone so it is fair and more economically efficient.

Yeah it's essentially just an obfuscated tax. It's just too bad that most people fail to grasp this.

"As another aside, it’s worth pointing out that you can take a one ounce gold coin minted by the U.S. government to a bank and, since it says $50 on it, in theory, they’ll credit your account by that amount if you ask to deposit it since it is legal tender. Alternatively, you could take that same coin down to the local coin shop and the man behind the counter will eyeball it and then give you cash or a check for almost $1,700, so, there is already a precedent for a gaping difference between face value and “melt value” – the trillion dollar platinum coin just takes this to a whole new, absurd level."

It has already been noted that all the rounds of QE are already working to devalue the dollar.

The Platinum 'Con' is just a way around the debt limit. Devaluation is already the set policy, thus QEInfinity.

Also, the default position of leftists is mockery, as evidenced by the trolls that post here. Refusal to engage in substative debate of facts and ideas is the norm for them, thus they do not have to face reality, and mockery makes them feel smug and superior even though it has the direct opposite effect of making them ignorant.

It is a shame that it is pervasive. It contributes to degradation of civil society leading to eventual collapse. (I know Spengler has been all the rage on the intertubes lately)

It seems like there is a whole lot of intentional mis-understanding all around.

For bullion coins of gold and silver, the law spells out that the value should primarily derive from the content of precious metal. For platinum bullion coins, this is not spelled out. Hence the loophole that would allow a Trillion Dollar coin. But, bullion has a meaning so you should not have to also point out this meaning in a law for the word to mean what it means.

CWJ: I wasn't commenting in favor of or against (though I think our level of debt and dishonesty about it is immoral). I was merely explaining an interesting point.

I content the platinum coin approach is identical to quantitative easing, except QE maintains the fiction that we will ultimately retire the debt, while the coin does not.

Further retiring the debt must be done through tax dollars collected via our current economically inefficient, progressive tax system. The platinum coin scheme is a flat tax at all income levels and economically efficient.

As democrats are opposed to flat tax systems, they should be opposed to the platinum coin scheme.

I've read some arguments, by people who know a lot more about economics than I do, as to why inflation won't result, if we play our cards right. To me it feels like seeing a presentation on a perpetual motion machine, created by someone who knows better, but has a sound grasp of physics.

If they present it cleverly enough, I may not be able to identify the catch - but I know there is one. " - JPS above

Right. This was what the housing bubble engineered by Barney Frank, Chris Dodd & Ass. was about, and the other schemes the Democrats are now floating is more of the same.

Here comes more taxes and BTW - Hillary proposed this during Hillarycare if memory serves and the dems were on board then - via Drudge:

...Raising tax revenues without raising tax rates could take several forms.One proposal popular with economists is treating some portion of employer-provided health insurance as taxable income on a filer’s tax return, an idea proposed by Hillary Clinton and accepted by many Democrats during the 2008 campaign. If a health plan is valued at more than $14,000, for example, the sum above that could be treated as taxable income....

This Platinum Con reminds me of Hitchhiker's Guide to the Galaxy (The Restaurant at the End of the Universe technically) where Arthur Dent and Ford Prefect have made it back to Earth in prehistory with a crashed spaceship full of Golgafrinchans. This was a ship full of hairdressers, middle managers, telephone santizers, and the like, that were deemed useless by their parent civilization and shipped off in an Ark ship.

Once the Golgafrinchans arrived at Earth, they decided to set up a society, and deemed that leaves from trees were to be used as money. Everyone instantly became rich!

As far as I can tell there is no actual platinum or actual money behind this coin. It's actual value is the value of what is needed to make coins. As the loophole requires platinum coins they could have the barest bit of platinum in the coin. They would simply give it a face value of a trillion and presto it's worth a trillion. The actual value of the coin though might be .037 cents. Platinum is only required because the loophole requires there be platinum.(govt has createdVarious commemorative coins usually with platinum and the treasury canMake such coins of any denomination. Though it was never intended to be used as say a way to get us out of debt.It's just a novel way to bypass the debt ceiling by generate a quick trillion in fake money.

"I don’t think it makes sense to think about this as some sort of “loophole” issue. Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins."

I've read some arguments, by people who know a lot more about economics than I do, as to why inflation won't result, if we play our cards right. To me it feels like seeing a presentation on a perpetual motion machine, created by someone who knows better, but has a sound grasp of physics.

If they present it cleverly enough, I may not be able to identify the catch - but I know there is one.

This is something that has not been made particularly clear in any of the media presentations I've read, but here is my understanding from the last thread.

1. The $1 trillion coin itself would not enter circulation (obviously), but be deposited in the Treasury account at the Fed. Treasury would simply draw down on that account as needed.

2. Normally, that would lead to an expansion of the money supply because anything the Treasury draws out then enters circulation.

3. However, because the Fed has been buying up massive amounts of US treasuries (US debt) as part of Quantitative Easing, they can supply the Treasury's cash needs by reselling their stock of US treasuries onto the market. Thus, as a practical matter, for every dollar that goes to the Treasury, a dollar will have been removed from the normal money supply.

4. The Fed now holds $1.6 trillion in US securities, thanks to QE, so they can totally do this.

No one on the left be-clowns themselves as much or as often as Matthew Yglesias does. He's the 'Let's get Mikey - he'll eat anything' liberal writer.Even Andrew Sullivan doesn't don the red ball nose and big orange shoes as much.

Incidentally, I think it becomes clearer if you think of the Fed and the US government as functioning sort of as one entity. The trillion dollar coin deposit would be an in-entity transaction, just moving notional amounts from one ledger to another. Similarly, when the Fed "buys" new US debt from the US government, it's an in-entity transaction. When the Fed then sells that US debt on the open market, however, it's like issuing new government debt.

The US government is barred by the Constitution from issuing new debt without Congressional authorization. But the Fed is not so bound -- the debt they're sort-of-issuing is debt the government already issued (to the Fed).

"The NRCC believes it. They said the amount of platinum needed to mint a 1 trillion dollar coin would sink the Titanic!"

Which is true, of course. If we were actually minting a coin with a $1,000,000,000,000 value that's how much platinum would be required.

It's absurd, but that's the point. Because merely refuting it forces people like Yglesis to argue that using their magic platinum penny with a pretend value of $1,000,000,000,000 to legally allow unlimited spending is somehow NOT absurd. Good luck with that.

The edifice falls apart when you take it to extremes. We are 16 trillion in debt, therefore let us mint 16 trillion dollar platinum coins.

What makes this scenario laughable that doesn't hold for the single 1 trillion Platinum Con?

If the government minted $16 trillion in platinum coins to retire the debt, all of that $16 trillion would hit the money supply at once, triggering devastating inflation. Unlike with a single $1 trillion coin, QE has not given the Fed sufficient US treasuries to sell to offset the natural inflationary effect of adding $16 trillion to the money supply.

Silver and gold coins often have a face value far below what the metal is worth.

What do you think the IRS taxes you on, the face value or the actual worth?

Mentioning the amount of platinum needed probably started out as a way to show how the coin was not backed by anything, and then people who didn't understand ran with it.

We don't have a gold standard or platinum standard so it need not be backed by anything at all.

Essentially, if it does not go into circulation in some way, its just an accounting trick.

They call accounting tricks "tricks" for a reason.

If Greece did this, would you feel this was totally legit? NO.

How about a company you owned stock in? NO.

Also, I believe if Treasury did this, it would set a precedent for them doing the same thing, except instead of sending the coin over to the Fed, they would send coins to the Bank of China to pay off our debt interest and principal as well.

I remember back when the line-item veto was overturned. The crux of the decision IIRC was that Congress cannot through a statute, give-up constitutional authority.

The constitution clearly gives Congress the power to authorize borrowing money. They cannot pass a law (short of changing the constitution) which removes this power, as the "loophole" would supposedly do.

When Canada minted "million dollar" gold coins they actually used a million dollars of gold.

Of course, what the left-ists are proposing is just to acknowledge that we invent money out of thin air and do exactly that.

This really exposes the point of the debate. Those concerned with the debt feel that this fabrication will eventually catch up to us, and the longer we wait, the worst the fall will be.

Those who feel that since the economy has run so well for 40 years based on the underlying assumption that the emperor has no clothes (as the worlds reserve currency we can invent as many dollars as we want) that we can not only acknowledge the emperor as no clothes, but parade him around on town to the entire world.

It's absurd, but that's the point. Because merely refuting it forces people like Yglesis to argue that using their magic platinum penny with a pretend value of $1,000,000,000,000 to legally allow unlimited spending is somehow NOT absurd. Good luck with that.

I think a key point that supporters of this idea ought to be emphasizing is that -- at least as I now understand it -- it doesn't allow "unlimited spending" at all. It's basically a one-off stopgap measure. Once the Fed runs out of US treasuries to sell, either the Executive has to go back to Congress and ask them to raise the debt limit, or the Executive has to risk triggering runaway inflation. That limit hits at $1.6 trillion, or a little over a year of deficit spending.

So it's actually much less of a circumvention of the Constitutional order than it looks like at first glance.

Subsequent to September, 2008 the Velocity of Money in (at least) the US economy declined from 3.31 to 1.78. That is, one dollar now changes hands in one year approximately 55% as often as it did before the current depression (make no mistake - this is a full-on depression). The Federal Reserve has simply inxcreased the supply of dollars in the economy such that the larger number of dollars, changing hands at the new reduced rate supports a reasonably vigorous GDP.

We won't see significant inflation unless and until the Velocity of Money increases (IF banks are lending more money than they are accepting in fresh deposits - not yet!!) AND IF the Federal Reserve does not respond to the increase by removing money from circulation (by selling bonds and driving interest rates up).

Krugman is a poseur, Nobel Prize be damned. The Fed must buy something with invented dollars to increase the money supply. Until the Debt Ceiling is reached, the Fed buys the Treasury bonds issued by the US Treasury to fund the deficit. Since Treasury won't be able to issue new net debt at the ceiling, there's nothing for the Fed to buy from Treasury - and no mechanism to fund the deficit.

I see you dropped the word "fair" from your 9:51 response. I'll take that as your answer.

As to Democrats being naturally opposed, I wouldn't be so sure. Many of the Democrats natural constituents have little or nothing in the way of savings to be devalued. Among those most personally affected by devaluation regardless of source are those who've saved all their lives in the hope of remaining financially independent.

If the government minted $16 trillion in platinum coins to retire the debt, all of that $16 trillion would hit the money supply at once, triggering devastating inflation. Unlike with a single $1 trillion coin, QE has not given the Fed sufficient US treasuries to sell to offset the natural inflationary effect of adding $16 trillion to the money supply.

If there are not enough QE treasuries currently issued then we combine it with 16 trillion worth of US treasuries to sell to offset?

Problem Solved?

Creating money by fiat will always have an inflationary effect, whether it is 1 trillion at a time, or 16 trillion at a time.

The consequences that will result are not limited to the balance sheet of the US government. The repercussions across the world of the US devolving into a sophisticated Zimbabwe are universally bad. Defaulting on our debt would have short term repercussions that are minor compared to the loss of faith in the US dollar.

This is all politics aimed at shoring up a welfare state that is impossible to sustain. This is the fact that refuses to penetrate. Tricks and gimmicks only make the inevitable end that much worse.

Platinum is a lousy choice for a metal for storing so much value. Pt is one of the most useful precious metals out there, unlike gold. To tie it all up would be to deprive industry and humanity of its utility.

I suggest they mint a plutonium coin instead because it can be made de novo from U-238 which is otherwise a waste product. It could be highly symbolic as well because the debt is so radioactive nobody wants to touch it.

You are falling into the same trap he does. You think you are smart, but you fail to test whether the person you're talking down to is already ahead of you. That is so boring.

I am not willing to spell everything out, beat every point with a sledgehammer, so that supercilious lefties will see what I know.

Trolls will troll, that is what they do. Smug superiority in their beliefs leads them to be unable to question themselves. They deliberately avoid taking their opponents seriously, and they are unable to defend their positions with reason.

Thus always with the 'squirrel', or strawmen, or any number of deflection mechanisms.

reductio ad absurdum [rɪˈdʌktɪəʊ æd æbˈsɜːdəm]n1. (Philosophy / Logic) a method of disproving a proposition by showing that its inevitable consequences would be absurd2. (Philosophy / Logic) a method of indirectly proving a proposition by assuming its negation to be true and showing that this leads to an absurdity3. application of a principle or proposed principle to an instance in which it is absurd

If there are not enough QE treasuries currently issued then we combine it with 16 trillion worth of US treasuries to sell to offset?

Problem Solved?

Well, no, because the whole reason they're talking about this weird scheme to mint a $1 trillion coin is because Congress is unwilling to raise the debt limit without some concrete evidence of efforts to restrain spending, which the President is totally unwilling to give. Pretty sure Congress is not going to agree to raise the debt limit by $16 trillion in one go.

As Der Spiegel reports, capital flight from Southern Europe has stopped and even slightly reversed in recent months. This is a belated reaction – so it is surmised – to the 'OMT' announcement effect. However, the move is still quite small at this stage, although we suspect that several officially unconcerned central bankers in the 'core' are letting out a sigh of relief that their TARGET claims haven't just risen even further. However, as Hans-Werner Sinn reminds us, the calming of the situation is entirely due to the risks having been shifted: "The debt crisis is eating its way ever further into the budgets of Europe's core countries," he says. "But policymakers are celebrating the obfuscation of this fact as a success...."

Well, no, because the whole reason they're talking about this weird scheme to mint a $1 trillion coin is because Congress is unwilling to raise the debt limit without some concrete evidence of efforts to restrain spending, which the President is totally unwilling to give. Pretty sure Congress is not going to agree to raise the debt limit by $16 trillion in one go.

But, if there are 16 trillion worth of platinum coins deposited, this reduces the debt limit by the same amount, as they are held as 'assets'. Thus the draw can take place up to as many coins as you can stamp out.

Thats the whole point of putting a fiat 1 trillion extra as an asset is to lower the 'debt' level. If this can be done with a single coin, this can be done with 100 trillion $1 trillion coins. We can eliminate taxes at this point because the government can fund everything by minting coins, lowering our debt level to keep it below the borrowing limit by providing itself assets that can be drawn upon.

Once upon a time, I published a magazine article about a purported new software product that could achieve apparently miraculous results in the area of software verification. The product came from a small company that had originally wanted to call itself Veritas ("truth" in Latin) but found that the name was already taken; so they called themselves Eritas instead.

I carefuly described the product in such a way that anyone with a computer-science degree should have known was impossible: To make it work would have required solving a famous problem--the Post Correspondence Problem--for which it had long been proven that no solution was possible.

Nevertheless, I got some earnest requests from readers for more information about the product. To those readers, I pointed out:

1) The company's name spelled backwards is "satire."

2) The first letter of every word in the article's title spelled "April Fool."

3) The first letter of every word of the article's section titles spelled "April Fool."

4) The first letter of every word in the first two paragraphs spelled "April Fool," as did the first letter of every word in the last two paragraphs.

Most readers were satisfied with this installation, but one was so angry at being had that he cancelled his subscription.

But, if there are 16 trillion worth of platinum coins deposited, this reduces the debt limit by the same amount, as they are held as 'assets'. Thus the draw can take place up to as many coins as you can stamp out.

Ah, I see what you are saying. But you can't avoid the inflation if you do that to the tune of $16 trillion. There is a mechanism to avoid inflationary expansion of the money supply if you keep below the amount of US gov't debt the Fed already holds and can sell.

Balfegor said...President has to ask Congress pretty please raise the debt limit if he wants to issue more US debt. (We already hit the debt limit on December 31).

So, as you said before, the whole trillion dollar coin scheme is effectively an accounting shell game so they can get around the debt limit for another few months... which theoretically wouldn't cause inflation since no new money would really be introduced to the public money supply... but a bunch of U.S. Treasury Securities would be sold to whomever would buy them.

Sorry if I'm simply restating what you already said but it helps me make sense of this nonsense.

Ah, I see what you are saying. But you can't avoid the inflation if you do that to the tune of $16 trillion. There is a mechanism to avoid inflationary expansion of the money supply if you keep below the amount of US gov't debt the Fed already holds and can sell.

This is do believe is the main problem that is ignored. Who will keep buying, or where will new buyers come from when devaluation is the policy.

Resulting feedback will increase borrowing costs when buyers insist on a better return on their devalued dollars. Debt service payments begin to skyrocket, and with the amount of debt we currently hold, paying an extra 1% to service that debt will destroy the economy of this country.

If you really believe that nobody really believes the "trillion dollar coin" myth, go to your main competitor, the Volokh Conspiracy, with the comment stream populated by supposedly highly intelligent lawyers, law professors, and laymen, tops in their fields. Most of the comments are from leftists who dominate their comment threads, and they, to a man, support this idea, rationalize it, and as usual, blame it all on the Republicans.

Sorry if I'm simply restating what you already said but it helps me make sense of this nonsense.

Yes, that's my understanding. Could be wrong! But following some of the comments in the previous thread, that's now my understanding.

Re: Brew Master:

This is do believe is the main problem that is ignored. Who will keep buying, or where will new buyers come from when devaluation is the policy.

Resulting feedback will increase borrowing costs when buyers insist on a better return on their devalued dollars. Debt service payments begin to skyrocket, and with the amount of debt we currently hold, paying an extra 1% to service that debt will destroy the economy of this country.

I do find it difficult to believe that the Fed won't have to sell at a steeper discount, and that it won't produce higher borrowing costs when we do resume issuing new net debt.

Because he's playing a word game. He doesn't consider spending "new" if it's spending that's previously been authorised under the continuing resolutions or appropriations bills, even if the spending hasn't actually taken place yet.

"I really am tired of looking at second rate crap from people who haven't done the reading."

Professor Althouse bitchslaps Garage in the mug.

Garage reminds me of a special subset of gunners in law school, always running their mouth, but just repeating senseless nonsense and basically wasting both the professor and the rest of the classes time. While in school they had some value in avoiding being cold called when hung over or slacking off, here in Professor Althouse's digital playground you serve only the purpose of being a target for mockery.

Like her repeated digs at your weight problem in the choice of stories she links to.

The discretionary spending decisions made by the budget resolution are implemented through the annual appropriations process. The Senate and House Appropriations Committees have the jurisdiction of discretionary spending while individual committees of jurisdiction oversee direct spending. The President requests appropriations in his budget request, and federal agencies provide analysis and materials on behalf of the President in support of these requests. However, the appropriations process is exclusively a legislative power. The appropriations process typically starts in the House, although recently this precedent has not always been followed. Before the full House or Senate votes on an appropriations bill, it must be considered by the appropriate Appropriations subcommittee.

The three types of appropriations measures are regular appropriations, supplemental appropriations and continuing appropriations. Regular appropriations provide funding for agencies over the course of the federal fiscal year, from October 1 – September 30. Supplemental appropriations provide budget authority for areas that have insufficient funding during the fiscal year, such as for military expenses or disaster relief. Continuing appropriations provides top-gap funding for agencies that have yet to receive regular appropriations

I must be missing something,Because I thought that yesterday was the day we discussed the relative merit of the trillion dollar coin.Today I thought the point of the discussion was whether there was any merit in our having had the discussion.

The reason yor gotcha on the RNCC doesn't work is that -- if you follow Professor Althouse's rule, you will see that GOP's point was not, you MUST have all that platinum in the coin to do it (which is what Matt Iglesias' citation implies they mean)' but that they were emphasizing, vivdly, the wide disparity between the coin's face and intrinsic value, in order to make the point about the problem of that.

Get it?

Maybe you don't think such a disparity matters, but you can allow that others do, and their thinking so doesn't make them idiots?

Well Mark I guess someone needs to let you in on a little secret, Ann really doesn't run the place. I'm not saying it's impossible to get banned, but we're all adults, and capable of walking away anytime we want.

You are asserting that the debt ceiling is a concept independent of borrowing?

It is borrowing. [raising the debt limit allows the Treasury to borrow for past spending. Not raising would prevent the borrowing]. The debt ceiling is independent of future spending and revenue legislation.

Balfegor said...Hmm. As I read more about this, I am coming around to the view that the "bullion" argument may be correct.

I hadn't read the new updates on the Volokh piece. Interesting distinction between commemorative, and circulating. If what is laid out in the links to the report from former US Mint official the platinum con is not legal, and in fact utterly pointless to attempt.

Correction to my above, it is 'legal' per se, just not worth doing as the US Mint must be given the cash to make the coin legal tender. Until the Mint is paid the face value of the coin, it is nothing more than shiny metal.

"It is borrowing. [raising the debt limit allows the Treasury to borrow for past spending. Not raising would prevent the borrowing]. The debt ceiling is independent of future spending and revenue legislation."

I must say that I really love the argument that we're only asking congress to pay for the bills they've all ready agreed to pay. it almost works.

I just have one simple question, since everything congress does has a price tag attached to it, and we are already in debt beyond our means to pay, wouldn't the logical thing be to dissolve congress?Does it make sense to allow congress to obligate us for further future debt?

Garage: but you assert that the debt ceiling does not stop the government from borrowing did you not? Is that not what you meant when you wrote:"The debt ceiling limit does NOT prevent borrowing for new spending." Can the "new spending" be used to pay old debts with the newly borrowed funds? Does the new debt not count toward the "debt ceiling?" If it does not then why does the old borrowing count against the "debt ceiling?"

You should really read the very short article at the link. It is not complicated.

garage, assuming that you do understand why the magic coin trick can only be done once, why do you think it's worth the appearance of absurdity?

I've already said the coin was absurd. Not anymore absurd than not raising the debt ceiling though, which we've done over 70+ times. Which would come as quite a shock to Jay, who I think is claiming we don't have any bills or debt to pay?

Yglesias' biggest mistake is his last sentence: "Even under the gold standard the value of coins was a pure legal convention."

No, no it wasn't. Back in the 1870s, U.S. paper notes traded at a discount to gold coinage - I've seen magazines with the price in gold and "paper money at the current exchange rate". A gold eagle was worth something because it contained a specific amount of gold at a specific fineness. A $10 bill was only worth something because people believed that banks or the treasury would give them gold in exchange for it, and in the 1870s, that confidence, damaged by the Civil War inflation, wasn't fully restored.

Now it may be they are so dumb That they think the whole $1 T coin was supposed to have that much intrinsic worth; but I don't buy that. It may be they were trying sleight of hand--changing the terms of the proposal and hoping no one catch it, in which case they were dumb to think they could get away with it-- but I do believe the tweeter could be that dumb. The third option is they actually intended to make the argument they accidentally made.

Now, the curious thing is, by using the word "worth," they did make a real argument--even accidentally; and they even got dopey Matt Yglesias to take the bait. So if they were dumb, they were "dumb like a fox."

Since the debt ceiling has been raised over 70x, who really thinks it won't be raised again?

Just remember, the financial markets consist of people who hold wide range of beliefs and fears. They aren’t all partisan hacks looking to make political statements. They have been through these negotiations before. They know what to expect. The magic coin gimmick opens a whole new frontier of potentially negative surprises that would likely entail enormous unintended consequences. I can’t see Obama being dumb enough to bite on this.

I bet the person that wrote that tweet would gladly accept large denomination currency from the federal government, and wouldn't question its "worth". They would spend or invest it without thinking about it. Anyways, not a big deal either way. Was just a tweet.

Just picture it -- a trillion dollars and you can fit it in your pocket.

Where would you ever be able to keep it? What guards could you possibly hire, when the simple act of (for example) pocketing a coin and hopping a plane to China would instantly make any one of them the richest man in the history of Earth?

When you say "well, they could never deposit it" -- sure they could. It is legal tender; that's the whole basis of this weird end-run around the debt ceiling. The US government would be legally obligated to exchange $1 trillion in cash for it.

I recommend a working assumption that other people are smart, and when you think you're reading something ridiculously stupid, go through the exercise of reading it with the thought that the writer is wonderfully clever.

Um, Ann, I hate to tell you, but if you took your own advice and thought your readers were smart (or "clever"), you would not have destroyed your own reputation (except among the howling tea party base) by making up all your lies about Hillary Clinton, about onion rings, about Benghazi, about NIG on pajamas, about Obama leering at a teen girl with Sarkozy, and so on -- to say nothing of your own supposed moderation.

The fact that you think you can make up bullshit and sell it to reasonable people is what has distinguished your entire blogging career, and marked you as little more than a wingnut, Limbaugh wanna-be.

It seems a waste to set up the minting press to strike one single solitary coin.

Perhaps we can follow up with 100,000 Limited Edition zinc commemorative coins: for the bargain price of $250 one can have a replica of the only trillion-dollar coin in existence, right there on the mantle. It'll even come with a Certificate of Authenticity robo-signed by the Head of Treasury himself! If you hurry now we will toss in an acrylic display case for only $50!!

"I am not willing to spell everything out, beat every point with a sledgehammer, so that supercilious lefties will see what I know. "

Which is where we differ - I am more of the No Dead Horse Left Behind, Unbeaten school. To coin a trillion dollar phrase.

So when Matt Yglesias himself enlightened us yesterday with two new silly posts, I relied on two hundred sentences to accomplish what could have been done in two.

His first effort explained that the goal of the platinum coin program (part of the bullion program) was to exploit the seigniorage associated with stamping coins.

Oops - when one takes 3 cents worth of bronze and copper and stamps it into a quarter with a legal tender value of 25 cents, the Mint profit by fiat since the coin can now be sold for 25 cents.

But in the bullion coin program, the Mint takes an ounce of gold worth $1,6000, stamps it into a coin with a face value of $50, and... sells it for $0 to collect the seigniorage? Hardly - they sell it for the gold bullion value plus a mark-up for production, marketing and admin costs. No seigniorage, but Matt is still learning while educating the rest of us.

His next effort reprised the theme of his "Myth" post, but this time the target was the sillies at Fox News who think a bullion coin has to be valued by the weight of its bullion. If only they understood that a law that calls for a "bullion coin" means whatever Matt in his ignorance thinks it means.

@bpm: Interestingly, the people WILL pay for it as their money is devalued, but as every dollar is devalued by the same amount, this is effectively a FLAT TAX (percentage) on everyone so it is fair and more economically efficient.

True.

As democrats are opposed to flat tax systems, they should be opposed to the platinum coin scheme.

Not exactly. The Democratic Party is composed primarily of government employees, transfer payment recipients, and urban professionals who spend every dollar they make to maintain a suitable Manhattan/Malibu lifestyle. Their incomes will by and large rise in lockstep with the inflation rates via COLAs.

This platinum coin trickery, like the planned inflation the Fed has been inflicting on us since we went off the gold standard back in 1970 or so, is intended to loot wealth already saved by those who lived within their means, large or small, so they could be independent of the statists in their twilight years.

The Democrats are the party of Grasshoppers, and the Republicans at least claim to be the party of Ants. Who benefits more from this Zimbabwean cluster fuck?

Also note that as the platinum coins or quantitative easing XXVI take hold, more people will be subject to the millionaires tax. You know the one that only affects the millionaires? well, millionaires are the new middle class. Congratulations, School teachers are now millionaires. Truck drivers are now millionaires.

But gas is now 40 dollars a gallon and subcompact cars are 500,000 dollars dollars each.

I don’t think it makes sense to think about this as some sort of “loophole” issue. Using the statute this way doesn’t entail exploiting a loophole; it entails just reading the plain language that Congress used. The statute clearly does authorize the issuance of trillion-dollar coins

Sure, as long as you wish away the word "bullion". Unfortunately, it's right there in the text of the law.